That’s just a tooltip that appears when not recording but a track with some (even silent) audio data exists. So if you click and drag in the light blue track timeline area you’ll create a selection block to operate on.
I’d recommend to make yourself familiar with audacity while using a bigger screen resolution.
It looks like it can’t present all its UI elements on that small Pi screen, and typically you should go to Edit/Preferences and check your audio settings (like whether to use ALSA or JACK, which ports to record from etc.).